The Strategist

US watchdogs accuse Wells Fargo Bank former managers of deceiving investors

11/16/2020 - 03:52

The Securities and Exchange Commission (SEC) has accused John Stumpf, former Chairman and CEO of Wells Fargo, one of the largest banks in the United States, and Carrie Tolstedt, former Head of Consumer Banking at Wells Fargo, of providing inaccurate information to investors about the performance of consumer banking at Wells Fargo.

Ildar Sagdejev
Ildar Sagdejev
It is reported that between 2014 and 2016, former top managers of the bank described the so-called cross-selling of financial instruments to investors as one of the indicators of the bank's strong financial performance, even though these calculations were artificially inflated by accounting for transactions from accounts and services that were not actually used. 

Mr. Stumpf has already agreed to pay a $2.5 million fine to drop these charges and Ms. Tolstedt has been the subject of legal proceedings by the SEC.

It is known that in October 2016 John Stumpf was forced to resign due to a scandal: it turned out that bank employees were opening accounts and issuing credit cards to customers on a massive scale without their consent. 

At first the bank was fined $185 million, more than 5,000 of its employees were dismissed and several state authorities began investigating the bank. In February, Wells Fargo agreed to pay a $3 billion fine to settle charges of major irregularities. The SEC has allocated $500 million of these funds to compensate investors affected by the bank's activities.